Thank you for visiting Based on the opportunity costs how should Allan and Diana specialize Assume Allan and Diana completely specialize What will be the total production of muffins. This page is designed to guide you through key points and clear explanations related to the topic at hand. We aim to make your learning experience smooth, insightful, and informative. Dive in and discover the answers you're looking for!
Answer :
Final answer:
Allan should specialize in producing muffins and Diana should specialize in producing scones based on their respective opportunity costs, resulting in increased total production of both goods.
Explanation:
Based on the provided scenarios, Allan and Diana should specialize in the tasks they are most efficient at producing, given their respective opportunity costs. If Allan can produce more muffins than Diana and at a lower opportunity cost for muffins compared to scones, then Allan should specialize in muffins. Conversely, if Diana can produce more scones than Allan with a lower opportunity cost for scones compared to muffins, then Diana should specialize in scones. The fundamental principle here is the comparative advantage, which states that each person should specialize in the production of the good for which they have the lowest opportunity cost relative to the other goods.
The total production of muffins and scones will increase when both Allan and Diana specialize instead of trying to produce both goods. They can then exchange products to achieve a higher combined output than what they could individually produce on their own. The exact total production of muffins and scones would depend on Allan's and Diana's individual production capabilities once they specialize.
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